Fair taxes for heavy industry in Saint John would fund fair wages for municipal workers

Raising taxes to the national average for heavy industry in Saint John would generate the public funds required for a fair contract for the City’s outside workers without reducing City services or raising residential taxes. Analysis by the CUPE Saint John area office shows that residents and City employees are subsidizing heavy industry with “sweetheart deals.”

In January, Mike Davidson, the CUPE national representative in Saint John, made a public presentation to City Council showing that inequitable property assessment rates and a cap on taxes for heavy industry have resulted in lost revenues for the City totalling hundreds of millions of dollars every year.

Cleaning up after the snowstorm this past weekend reminded residents of New Brunswick municipalities that outside workers are vital in winter. Throughout the year, skilled outside workers perform tasks ranging from keeping our water and wastewater systems safe and reliable to maintaining and upgrading municipal infrastructure, parks and public spaces.

Yet despite their importance, the City of Saint John is continuing to blame municipal workers for the City’s financial situation and proposing to cut city services. CUPE maintains that all services could be maintained without raising residential taxes, if a fair property tax structure is imposed.

The City’s contract with CUPE local 18 outside workers expired in December 2019. Negotiations for a new contract that began in October have been “very strained,” said Davidson, explaining that the mayor and council are proposing a wage restraint policy that negates the principle of free collective bargaining.

In wage restraint situations, the wage increases are below the cost of living increase, meaning that workers actually lose money. The City is also suggesting that the bargaining unit could be reduced, meaning layoffs.

The approximately 180 outside workers in Saint John are not the only CUPE municipal outside workers without a contract. The collective agreement for outside workers in Moncton (CUPE 51) and Fredericton (CUPE 508) expired in December 2018 and in Bathurst (CUPE 550) in December 2017.

In an interview on the weekend with the NB Media Co-op, Davidson said the City of Saint John has not changed its position in the month since he made his presentation to City Council. Two things need to change, he said: the City needs to lobby the province to lift the 1.5% cap it imposed on property tax rates for heavy industry, and to create property assessment rates fair to both residential and heavy industry properties.

Davidson’s presentation includes many examples of “sweetheart deals” with the Irving family of companies, including the 2005 Canaport LNG terminal. Built for approximately $1.2 billion, the City Council and provincial government gave Irving a $7.5 million annual property tax discount even though Irving was guaranteed $20 million US a year from Repsol. From 2005 until 2017 approximately $90 million was not collected.

In another example, the Irving Oil refinery is paying about one-tenth of the property taxes of a comparable facility in Alberta (chart above).

In a final example, the water rate for heavy industry is significantly less than the rates for households. The NB Media Co-op recently published an analysis of this situation, The Great Water Give-Away that unfairly benefits the Irving Pulp and Paper Mill over seniors and other City residents.

Davidson’s presentation also included a January 2020 report by Canadians for Tax Fairness pointing out that lower tax rates for corporations were supposed to bring benefits for workers, increased investment and more jobs. However, instead, lowered corporate taxes have led to sky-high corporate profits, declining rates of business investment, huge increases in senior management compensation, slow growth in workers’ wages, and increased social inequality.

Davidson’s presentation notes that when Premier Blaine Higgs was the former finance minister in the PC government, before losing the 2014 election, his government reduced the assessment rates for heavy industry by 43%, leading to a 43% reduction in taxes for Irving Pulp and Paper, Irving Paper and Irving Tissue. For those three companies alone, the total taxes went from almost $132.7 million in 2013 down to $82.3 million in 2019, a loss of more than $50 million annually to the City of Saint John.

The Irving family of companies are private, meaning they are not on the stock market and so do not have to file investor reports with details of profits. In 2019, the list of Canada’s richest people was published, including 41 billionaires. The owner of Irving Pulp and Paper, Irving Paper and Irving Tissue, James Irving, is #5 on the list, with a wealth of $6.3 billion, and Irving Oil owner Arthur Irving is #13, with $3.5 billion. In November, Megan Mitton, Green Party MLA for Memramcook-Tantramar, made a short witty “congratulatory statement to billionaires” in the Legislature, suggesting that the two Irvings could chip in some of their wealth, roughly equal to the annual provincial budget, rather than balancing the budget on the backs of workers.

CUPE’s Mike Davidson wants Saint John citizens to educate themselves about the tax system and ask questions of candidates for City Council in the lead-up to the municipal election in May. His presentation is available on the Saint John City Council meeting website or can be downloaded here. The NB Media Co-op will continue to follow this situation.

Susan O’Donnell is a member of the NB Media Co-op editorial board and a former union leader with the federal public service union, PIPSC.